Trump is on a very foolish mission to “Pack the Fed”.
Working on Replacements
Fed Chair Jerome Powell will be gone in 11 months. Who’s his replacement?
CNN reports Trump calls Fed Chair Powell an ‘average mentally person’ and says he’s working on replacements
President Donald Trump stepped up attacks on his handpicked Federal Reserve chairman on Wednesday, claiming Jerome Powell has “low IQ” and suggested that he has narrowed down the list of potential replacements to three or four people.
“He’s an average mentally person…Low IQ for what he does,” Trump said of Powell during remarks at a press conference at the NATO summit in the Netherlands Wednesday. “I think he’s a very stupid person, actually.”
Trump has been berating Powell all year, arguing the Fed’s reluctance to slash interest rates is costing the federal government hundreds of billions of dollars in interest.
Asked about whether he’s started interviewing a replacement for Powell, Trump said: “Yeah, I know within three or four people who I’m going to pick.”
Trump added that Powell’s term is up “pretty soon fortunately, because I think he’s terrible.”
Lutnick Blasts Powell Again
I just listened again to Jerome Powell testify. He goes out of his way to call out tariff price increases POTENTIALLY adding to inflation, as if he’s seen some, but,in fact, he testifies that over the last 2.5 months such inflationary price increases have not materialized. ZERO. He literally states that “the overall inflation picture is pretty positive.” What he avoids discussing is the incredible revenue increase the US has received from these tariffs. Our current run rate exceeds $30 billion per month. $30 billion per month in cash received by the US Treasury to reduce our deficit and lower the amount we need to borrow. Low inflation coupled with impressive increased revenues is why our interest rates should be lowered. Lower interest rates will reduce our deficit by dropping our borrowing costs, and will spur economic growth which drives tax revenues even higher. Win, win, win. That’s why President Trump calls Powell a loser. Because Powell would rather ignore the tariff revenues and keep US rates the highest in the world (for a first class country) because he’s afraid to act. Each 1% cut saves the US hundreds of billions of dollars in interest payments. He should help our economy grow while shrinking our deficit. It is a simple formula. There is no inflation; he just testified to it. Just cut our interest rates, our deficit will naturally shrink and our economy will soar. Jerome Powell—your job is to help Americans not hurt them, so do your job and CUT our absurdly high Interest rates at your next meeting.
Howard Lutnick is Trump’s Secretary of Commerce.
Lutnick’s Five Assumptions
- Tariffs haven’t impacted the CPI yet, so they won’t.
- Tariff collection will continue at the same pace.
- Tariff collections will not act like a tax hike.
- Cutting short-term rates will lower long term rates.
- Cutting rates will not further economic bubbles.
I disagree with all of the above but agree with this comment.
Once again, I am siding with Powell who I believe is generally clueless. But that is over Trump who I am certain is economically clueless.
Five Facts of the Matter
- No one has any idea what Trump will do with tariffs or how many times he will change his mind.
- No one has any idea how businesses or consumers will react.
- No one has any idea how much other nations will respond or what that will do to the whole scheme.
- No one can yet accurately assess the short-term impact of the One Big Beautiful Act (OBBA) on US treasury yields.
- No one can yet accurately assess the long-term impact of the One Big Beautiful Act on the economy.
The outcomes from the above could be stagflation or a deflationary collapse. I would not be surprised by either.
If you dispute the facts, then please tell us precisely what Trump will do, how other nations will respond, how consumers will respond, what OBBA will look like, and why tariffs don’t matter.
My Two Assumptions
- If Powell prematurely cuts rates, yields will rise on the long end of the curve.
- If Powell prematurely cuts rates, the dollar will sink increasing the odds of price inflation.
I cannot prove the above but that is how long-dated US treasuries are reacting.
Question of the Day
Assumptions aside, what the heck is Powell supposed to do but wait?
It does not matter if you believe Powell made political cuts to support Biden because even assuming he did, two wrongs don’t make a right.
From where we are now, Powell seems to be acting rationally, and that is all we can go on.
What’s the Fed’s Mission?
The Fed’s alleged dual mandate is nonsense. History shows the Fed’s mission is not price stability or full employment. But if that’s the mission, the Fed should be fired for incompetence.
Rather, the Fed’s unstated real mission is to bail out the banks when they get into trouble.
End the Fed
The Fed is a pack of group-think charlatans.
There should not be a Fed, but only under one proviso: The Fed should be replaced by nothing.
The market can easily set interest rates.
Central Planning Question
Q: Should the Fed set the price of orange juice?
A: Obviously not.
If I proposed having the Fed set the price of orange juice, people would think I was crazy.
Yet, setting the price of orange juice would be much easier than the Fed’s stated dual mandate of price stability and maximum employment.
Fed’s Track Record
In practice, the Fed is nothing more that a pack of soviet-style central planners with an equivalent scorecard.
It has a proven track record of blowing bubbles of increasing amplitude over time.
However, the Fed is very creative when it comes to its true mission of bailing out banks when needed.
A Government-Led Fed
Trump has made it clear he will try to pack the Fed with economic illiterates whose only required skill is do what he wants.
This is as bad as Elizabeth Warren’s and AOC’s desire to pack the Supreme Court with unqualified judges who will do what Warren and AOC want.
Similarly, Republicans talk of impeaching judges who disagree with Trump.
And Trump is now actively campaigning to get rid of Rep. Thomas Massie because Massie is a true fiscal conservative.
This is what’s become of the Republican party.
Massie will not go along with huge budget deficit increases.
The Big Danger
The biggest danger is not an independent Fed, but a Fed that is slave to the wishes of the President or Congress.
MAGA now cheers bigger deficits, more spending, more complicated tax code, more tax breaks to favored groups, and Trump’s efforts to fire Powell.
Few see the obvious problems. The first is that Trump is economically clueless. For those who disagree, the second is Democrats are likely to do anything when blessed with the same power.
Huge inflation is in store if Presidents start controlling the Fed.
So who has the lower IQ here? Powell or Trump?
Related Posts
June 18, 2025: Fed Projects Higher Unemployment and Higher Inflation Citing Tariffs
The Fed’s outlook has soured vs its March forecast. “We expect a meaningful rise in inflation in the coming months,” said Powell.
June 20, 2025: Are You Doing the Side Job Hustle to Make Extra Money?
I created three new charts to show what the BLS says and others dispute.
June 20, 2025: Did the Fed Just Predict a Recession for Later this Year?
The Fed does not “predict”, but its GDP projections say “yes”.
Low IQ?
That is what we saw when Kamila debated Trump and he got so flustered he started babbling about immigrants eating peoples cats and dogs!
I would personally love to debate Trump!
Like taking candy from a baby. Or, kicking a bully in the nuts.
Super satisfying in the second case.
Enjoy!
Mortgage rates are significantly lower in Canada and vastly lower in Europe. Our yield curve is far out of line and the 10 year rate is much too high. Powell has created a huge disaster in the housing market and needs to go pronto.
“30 Year Mortgage Rate in the United States averaged 7.71 percent from 1971 until 2025, reaching an all time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021.”
Actually just average today,
Trump expresses himself in the manner and with the vocabulary of run of the mill 17 year-old high school junior. Only convoluted theories about tactical presentation, deal-making disequilibrium moves, and 5-D chess can transmogrify the plain evidence.
Add to the complete lack of nuance, the flip flopping, the buffoonish bombast the fact that he never shows any evidence of knowing any subject’s details.
Trump is obviously a narcissist who fragile ego needs to be continuous fed by attention, adulation, and his own non-stop fabrications to maintain his identity. Trump thinks he runs the world. There is a book, called How to run the universe without alarming the orderlies. It is about characters like Trump.
You wanna talk about low IQ. Congress has a very LOW IQ for continually holding on the the Federal Reserve. It is a private institution with no real connection to the governance of the country. It has two main functions: 1) to make a profit for its investors and 2) to maintain a debtor nation. You need to remember that the National Debt comes from the Interest that the Federal Government has to pay to the Federal Reserve for borrowing our tax money that is payed to the Federal Reserve. The investors make money from this. This also is one of the main ways of keeping the US as a debtor nation. Another means of creating debt is through the Prime Interest Rate. The manipulation of the Prime Interest Rate is the interest rate passed on to the banks and the banks pass it on its borrowers. It is then payed back to the banks by the consumer with interest and they pay back to Federal Reserve with interest. The Prime Interest Rate doesn’t help anyone but the Federal Reserve and it certainly doesn’t help the economy. It’s all a scam just as phony as a pyramid scheme. The best thing would be to let the economy find its own level and let the banks vie for your money through their own interest rate for you to borrow. Without the Federal Reserve the consumer would save a LOT of money. Got to remember, the US economy IS a CONSUMER DRIVEN economy. Sticking a middlemen in the mix only muddies up the water.
While I agree that the fed has traditionally be slow to react to the obvious for decades, It is much better that it remains separate. It is not surprizing that a president who presides over a real-estate empire wants lower rates. Conflicts of interest are the rule rather than the exception in this administration.
I don’t understand the reluctance to change as needed. Many are acting like lowering rates cannot be reversed or not lowering rates cannot or must not change either. Being unresponsive could be the mistake. Oh well, I would be more responsive. I mean a quarter point here or there seems reasonable, but I guess nothing is too.
Why not increase them a quarter point? Investors will get higher income and he higher income tax would reduce the deficit.
Losing Fed Independence is the last one out turning off the lights.
Trump is the one with a cognitive issue (Many, actually). He surrounds himself with Sycophants, and then they YELL out the supposed truths, such as the “MIDNIGHT HAMMER” bullshit offensive, which no one talks about when it comes to cost of such work. The entire admin, at one time was considered entertaining, but it did not feel like the Circus that BidenCo presented. Trump’s true colors come out with all of this bullshit, day to day. It is tiring at best and incredibly concerning at it worst.
Biden was a meditation session in a Buddhist temple compared to this three ring freak show
His rhetoric is so toxic displaying his narcissism and economic ignorance. Its pathetic that we only had these two choices to vote for. Should have wrote in Mish.
Jerry looked really tired and worn out during testimony. Especially given some of the questioning on politics, including Trump supporters and woke lunatics. Which is funny to see overlap on desire for rate cuts, by the right which wants to blow a bigger speculative bubble, and the left which wants more affordable and so called equitable housing.
There is only so much POTUS abuse a human can take before it shows on their leathered face
If yields rose on the long end, time to lock in long end yields.
The Fed is a control mechanism for global finance, not simply the US. The (Federal) reserve currency.
Sadly the one with low IQ is Trump. He simply tells lies and does nothing else. How could he possibly know the effectiveness of the Iran bombing campaign before the reports were compiled? He just made something up, because the thrill is in the announcement, not in its reality. The guy is a major liability
Ever notice how nearly 100% of the insults he lobs at others are in fact Inconvenient Truths about himself?
We have had 2 score years of interest rates decreasing and we have a fiscal and monetary fiasco as a result. Would not lowering interest rates be doing more of the same and expecting different results?
No Trump isn’t insane everyone else on this planet is
We have had 5 years of fiscal bingeing. The monetary fallout is simply an outcome of that.
Why does US politics these days attract almost exclusively narcissists, sycophants, and flunkies? I don’t know the answer. But I am afraid the same personality types are going to dominate institutions like the Fed. From Turkey‘s inflation experience, we know what that means.
It is in the nature of our two party system. In order to win an election, you have to have lots of campaign money. In order to get lots of campaign money, you have to be willing to represent the interests of those who control those large pools of money. The folks who control those large pools got into that position by caring only about their own interests (narcissists), so they expect their chosen politicians to be sycophants and flunkies. The beauty of the system is that you only need to control 51% of the politicians (regardless of party).
Some of the republican candidates did not fit that bill. I really liked Vivek. The best democrat candidate running in a while was Bloomberg but he went down in flames as he wasn’t a communist democrat nut job
Trump means to say … “Powell does not have what it takes to be my FED Chairman.
The LOWEST IQ, like my other advisors.
So, he has to make way for his bunch of totally clueless.
God Bless America !!!
“Trump is economically clueless”
He is a businessman. He knows what he is doing. He has doubled his wealth within a year.
Is he clueless?
he doubled his wealth through corruption. And by buying a crypto company and then ordering regulators to allow crypto to infiltrate everything.
Corruption is not equal to intelligence. It takes very few brains to accept the obvious bribe of a plane from Qatar, for instance.
Trump is a criminal businessman and a conman. Oh yeah, he’s also mentally ill. 86/47
Jim Bianco shares your views on what happens to the long end if the fed starts cutting. I’d bet on your side if forced.
Trump may be correct in his assessment. Too bad he always sticks his ass in your face with his unnecessary insults and so much loves to hear himself talk. May he take a vacation soon and give us all a break.
Trump continually spouts, “I’m the smartest guy in the room.” By any reasonable metric he’d be fortunate to make the top 50%.
Powell strikes me as intelligent, but I sure wouldn’t bet in the affirmative about his (or any other Fed member’s) integrity and positive effect on this struggling nation.
“Here’s your IQ, buddy …”
https://m.youtube.com/watch?v=FCOsnlY-oZs
Excellent post.
This encapsulates the “Got Exit Strategy?” question quite nicely because in the end, anyone that can think beyond the next 5 minutes knows TACO will eventual appoint his psychophant. After that the crash will come fairy quickly.
I ask again, the clock is ticking, got exit strategy?
“It’s Trump turtles all the way down and inflation chaos all the way up”
I worked at the Chicago Board Of Trade in the 30 Year Bond Pit in the late 80’s into early 90’s, when the long bond was trading in the 9 handle’s! What a time to be there! Been saying for decades that the creation of the Federal Reserve in 1913 was, and continues to be this countries worst/biggest mistake EVER! Nothing else comes in close second even!
Trump always has been and continues to be an economic illiterate and a financial clown!
How about President Roosevelt’s confiscation of gold?
The Fed has destroyed 98% of the scheisse dollar’s purchasing power through inflation since 1913 and continues to steal purchasing power every year. That trumps the gold confiscation in ’33.
That’s called Wealth Effect.
Everybody is richer every year quantitatively. Everybody feels good.
Bottom half will realise first.
Then . . . .
Nah, the gold confiscation was the inflation control mechanism. Bank lending is the cause of inflation and money supply growth. The gold standard caused frequent economic collapses which would destroy the money creation. Yes, it was a horrific system for the bottom 90% of the population, but they’re not the people that count.
Trump needs to drag Powell down to his level with the insults and then beat Powell with experience. Never argue with an idiot.
Bessent is the only person in this administration who is knowledgeable about economics. Luttnick is not to be trusted, and Trump constantly changes his economic policy. Not a lot of stability to be found.
Trump is surrounded by Cheer Leaders.
When he places a compliant Fox News bleach blonde in Powell’s position, inflation is gonna go thermonuclear.
Asset price inflation fo sho. DJIA 100K!
My house will double in value….again. But the money to buy it will be devalued to almost zero.
TACO proves on a daily basis that it is he who has the lowest IQ and common sense of the bunch.