{"id":6675500,"date":"2026-01-12T11:52:28","date_gmt":"2026-01-12T16:52:28","guid":{"rendered":"https:\/\/krieger.jhu.edu\/financial-economics\/?p=6675500"},"modified":"2026-01-12T16:21:20","modified_gmt":"2026-01-12T21:21:20","slug":"the-fed-and-trump","status":"publish","type":"post","link":"https:\/\/krieger.jhu.edu\/financial-economics\/2026\/01\/12\/the-fed-and-trump\/","title":{"rendered":"The Fed and Trump"},"content":{"rendered":"\n

By Jon Faust<\/p>\n\n\n\n

In light of recent events and today\u2019s front pages, I have an update to something I said last April<\/a>:<\/p>\n\n\n\n

\u201cTrump seems to want all the significant sources of authority in this world to bend to his whims: courts, elite universities, foreigners\u2014both friend and foe. It strikes me as quite unlikely that the Fed will ultimately escape this.\u201d\u00a0<\/p>\n\n\n\n

Quite unlikely doesn\u2019t capture it anymore. We are now on the verge of complete Trumpian control of monetary policy.  <\/p>\n\n\n\n

Fed chair Jay Powell, an honorable public servant, will not yield, but that only matters for a short while longer.  The specifics of how the Fed takeover, veiled or open, will play out over coming months remain uncertain, but we needn\u2019t quibble about the likely route to recognize the endpoint.<\/p>\n\n\n\n

The endpoint is not merely a generic loss of Fed independence:  That\u2019s too tame a characterization.  Many economies have done fine for significant periods without independent central banks.  This is about Trumpian control.<\/p>\n\n\n\n

Will the vaunted bond market vigilantes come to the rescue before it\u2019s too late?  I have been continuing<\/a> to think about the parable of boiling the frog, and the fact that scientific research says that, in contrast to the parable, the frog will jump out of a container as the water temperature rises. Good for frogs. <\/p>\n\n\n\n

But frogs have a major advantage over humans: their limited cognitive abilities don\u2019t extend to cognitive dissonance, the remarkable ability people have to fabricate a benign way to reconcile conflicting thoughts such as \u201cTrumpian control of monetary policy\u201d and \u201cmy portfolio has been doing great.\u201d <\/p>\n\n\n\n

Human foibles aside, I still hold out hope that one or more financial market convulsions will rein in Trump\u2019s worst instincts. I suspect those are in our future.<\/p>\n\n\n\n\n","protected":false},"excerpt":{"rendered":"

By Jon Faust In light of recent events and today\u2019s front pages, I have an update to something I said last April: \u201cTrump seems to want all the significant sources of authority in this world to bend to his whims: courts, elite universities, foreigners\u2014both friend and foe. It strikes me as quite unlikely that the […]<\/p>\n","protected":false},"author":471,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-6675500","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/posts\/6675500","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/users\/471"}],"replies":[{"embeddable":true,"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/comments?post=6675500"}],"version-history":[{"count":3,"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/posts\/6675500\/revisions"}],"predecessor-version":[{"id":6675505,"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/posts\/6675500\/revisions\/6675505"}],"wp:attachment":[{"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/media?parent=6675500"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/categories?post=6675500"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/krieger.jhu.edu\/financial-economics\/wp-json\/wp\/v2\/tags?post=6675500"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}