Slate Money
Jay Powell’s Tough Call
Apr 19, 2025
This week features Cardiff Garcia, Editorial Director of the Economic Innovation Group and host of The New Bazaar podcast. He discusses how Fed Chair Jay Powell is resisting Trump's tariff pressures while navigating a complex economic landscape. The conversation dives into the politicization of the IRS, including potential consequences of its gutting. Additionally, they examine the escalating trade war with China and its economic implications while keeping the tone light with humor and personal anecdotes.
53:46
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Quick takeaways
- The possibility of President Trump firing Fed Chair Jay Powell raises concerns about the Federal Reserve's independence and economic stability.
- Cuts to the IRS under the Trump administration threaten tax compliance and revenue collection, potentially harming taxpayer services.
Deep dives
The Impact of Fed Independence on Monetary Policy
The potential firing of Fed Chair Jay Powell by President Trump raises concerns about market stability and the independence of the Federal Reserve. If Powell were to be dismissed, any new appointment may ultimately serve as a proxy for Trump's desires, particularly a preference for lower interest rates. Such a scenario could lead to significant economic consequences, including excessive inflation if rates are kept too low amid a growing economy. This situation is particularly critical as inflation is already above the Fed's comfort level while possible economic slowdowns loom, creating a precarious balance known as stagflation.
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