economy
January 16, 2026
Trump learns the hard way that interest rates control the presidency
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TL;DR
- Jerome Powell, almost 73, is expected to retire after his term as Fed Chair, despite his board governor term continuing.
- An unprecedented criminal inquiry into Powell by the DOJ is described as a pretextual move by President Trump to influence the Fed.
- Powell stated the investigation threatens the Fed's ability to set interest rates based on evidence rather than political pressure.
- Some Republican senators are blocking Trump's nominations to the Fed until the DOJ investigation into Powell is closed.
- Treasury Secretary Scott Bessent is reportedly concerned about the potential impact on global investors and Treasury yields, given the national debt.
- The article argues that interest rates, specifically Treasury yields, control the presidency, not the other way around.
- Despite Trump's actions, the Fed's current stance on pausing rate cuts is deemed correct due to near full employment and inflation stabilization.
- Historical examples, such as Nixon's pressure on Arthur Burns, highlight the dangers of attempting to politically control interest rates, leading to stagflation.
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