Tag Archives: Jerome Powell

Jan 29 2026

Powell Concerned Over Central Bank Independence


Posted originally on Jan 29, 2026 by Martin Armstrong |  

JeromePowellFedChair

Jerome Powell came out to defend the integrity and sovereignty of the Federal Reserve. “The point of independence is not to protect policymakers or anything like that. It is just that every advanced economy and democracy in the world has come around to this common practice. It’s just an institutional arrangement that has served the people well, and that is to have a separation between — to not have direct elected official control over the setting of monetary policy,” he said.

“The reason is that monetary policy can be used, you know, through an election cycle to affect the economy in a way that will be politically worthwhile,” Powell said. “If you lose that, it’s going to be hard to retain it, and we haven’t lost it. I don’t believe we will… it’s enabled central banks generally not to be perfect, but to serve the public well.”

I do not agree with Trump that political leaders should control the Federal Reserve or dictate monetary policy. That would be a serious mistake. Politicians operate on short election cycles and will always favor policies that produce immediate results, regardless of the long-term consequences. However, that does not mean the Federal Reserve is genuinely independent, nor does it mean that its structure has “served the people well,” as Powell claims.

The Federal Reserve is appointed by politicians, confirmed by politicians, and ultimately exists to support government financing. Its primary function today is to ensure that government debt can be issued and serviced. If it were truly independent, it would refuse to accommodate endless deficit spending. It does not. Instead, it responds to fiscal excess by monetizing debt and then pretending inflation is something mysterious beyond its comprehension.

The Fed was created in 1913 as a regional system precisely because capital flows change with the seasons. Crops are planted, money flows one way; harvest arrives, it flows another. That design worked because it was decentralized. What destroyed that structure was not politicians meddling in interest rates, but war. World War I forced the Fed to abandon its original mandate and become a funding arm of government debt. From that moment forward, independence ended.

The Fed today is appointed by politicians, confirmed by politicians, and operates entirely to accommodate government borrowing. If it were truly independent, it would refuse to monetize debt. Instead, it has enabled the largest expansion of government liabilities in human history while claiming neutrality. This is why the entire debate between “Fed independence” and “political control” is a distraction that neither can control inflation, and confidence itself is eroding.

Dec 11 2025

Hawkish Members Outnumbered – Fed Cuts Rates for Third Consecutive Time


Posted originally on Dec 11, 2025 by Martin Armstrong |  

Federal Reserve Bank

The Federal Reserve was divided this December; hawkish members of the FOMC were outnumbered, and the central bank approved its third consecutive cut of 2025. “We’re in the high end of the range of neutral,” Federal Reserve Chairman Jerome Powell added. “It″s so happened that we’ve cut three times. We have we haven’t made any decision about January, but as I said, we think we’re well positioned to wait and see how the economy performs.”

“The discussions we have are as good as any we’ve had in my 14 years at the Fed, very thoughtful, respectful, and you just have people who have strong views, and we come together and we reach a place where we can make a decision,” Powell said.

The ultimate 9-3 vote has brought the overnight rate down to 3.5%-3.75%. Governor Stephen Miran, appointed by Trump, naturally requested a steeper 0.5% reduction. Presidents Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago were the only members in favor of holding. Miran voted to hold rates during the past three FOMC meetings, but his time at the central bank comes to an end in January. Schmid voted “no” for the second consecutive time.

Of the 19 participants, four issued “soft dissents” expressing disagreement with the decision. Only 12 members have the right to vote on the final outcome. Remember that the president appoints the Board of Governors with Senate approval. Donald Trump sees rates through the eyes of a borrower and mistakenly believes bringing rates down to 0 would lead to business expansion and lower inflation. Trump now has the ability to replace members with candidates who support his dovish stance.

Inflation is driven by fiscal policy, not monetary policy. Congress can run deficits until the sun burns out, and the Fed has no authority to stop them. You can raise or lower interest rates all you want, for it will not change the fact that government spending has blown past anything sustainable. When you borrow without end, servicing that debt becomes a greater share of national income, and that is where the real inflationary pressure comes from. It has nothing to do with whether a handful of hawks around a conference table want 25 bps more. Once FDR hijacked the system and consolidated power in Washington, the Fed became an accessory to fiscal irresponsibility.

The system broke when the government swapped corporate paper for sovereign debt. Once the Fed became the buyer of last resort for federal spending, inflation became a political problem and not a monetary one.