Prof G Markets The DOJ Comes for Jerome Powell
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Jan 13, 2026 
In this engaging discussion, Liz Hoffman, a seasoned financial journalist from Semafor, and Justin Wolfers, an economics professor from the University of Michigan, dissect the DOJ's investigation into Fed Chair Jerome Powell. They argue that the probe is not only punitive but poses a significant threat to the Fed's independence. The duo reflects on how this political maneuvering could lead to inflation risks and challenges within market dynamics. They also delve into Powell's legacy and potential successors, revealing how the situation could reshape fiscal policy in the U.S.
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DOJ Probe Sparks Market Jolt
- The DOJ opened a criminal probe into Jerome Powell over his congressional testimony about Fed building renovations. Markets initially dipped but then recovered as investors weighed the political risk.
Undermining The Fed Mirrors Strongman Tactics
- Justin Wolfers called the move unprecedented in U.S. history and compared it to actions by strongman leaders abroad. He warned it places the U.S. in a club with nations that suffered severe inflation and instability.
Fiscal Dominance Risks Runaway Inflation
- Justin explained 'fiscal dominance': political pressure to set rates to lower government interest costs risks runaway inflation. He described how short-term rate control can lead to hyperinflation if independent policy is abandoned.