Trump considers naming the next Fed Chair early. I have a fifteen-point plan.
Trump Considers Naming Next Fed Chair Early
Fed Chair Jerome Powell’s term as the Chair of the Federal Reserve ends in May 2026.
The Wall Street Journal reports Trump Considers Starting an Early Search to Undermine Powell.
Trump is considering former Fed governor Kevin Warsh and National Economic Council director Kevin Hassett, according to people familiar with the matter. Treasury Secretary Scott Bessent is being pitched to Trump by allies of both men as a potential candidate, some of these people said. Other contenders include former World Bank President David Malpass and Fed governor Christopher Waller.
Because the new chair wouldn’t take office until next May, announcing the pick this summer or fall would be far earlier than the traditional three-to-four month transition period. An early announcement could allow the chair-in-waiting to influence investor expectations about the likely path for rates, like a backseat driver, attempting to steer monetary policy before Powell’s term ends.
Two Kevins and Mish
Also note Two Kevins Battle to Be Next Fed Chair in Trump’s ‘Apprentice’-Style Contest
Kevin Hassett, one of Trump’s closest economic advisers, is emerging as a serious contender to be the next Fed chair, according to people familiar with the matter. Hassett’s rise threatens the other Kevin—former Fed governor Kevin Warsh—an early favorite for the job who has angled for the position ever since Trump passed him over for it eight years ago. Some people close to the president worry that Warsh, who isn’t in Trump’s inner circle, won’t be a champion of lower rates.
What is unfolding is quintessential Trump: two ambitious men competing for his approval in a high-stakes contest that echoes the boardroom drama he once promoted on “The Apprentice.”
Hassett met with Trump about the Fed job at least twice in June, according to people familiar with the matter. The discussions marked a shift for Hassett, who previously had told allies he wasn’t interested, but now says he would take the job if offered.
I throw my name into the ring.
And I have a plan for what needs to be done. Does anyone else have a plan?
Mish’s 15-Point Fed Plan
- Explain to the nation why we don’t need a Fed and how independent central banks have created boom-bust cycles of increasing amplitude over time. The main corollary is history shows the one thing worse than independent central banks is a central bank run by politicians, frequently ending in hyperinflation.
- Surround myself with qualified insiders who understand the Fed but also believe in the mission to end the Fed.
- Stop paying interest on reserves, phased in over 18 months.
- Wind down the Fed’s balance sheet totally in 2-3 years.
- Require that assets available on demand such as checking and savings accounts are truly available on demand. That means demand deposits are parked in overnight US treasuries. This would be phased in over two years. As a result, we would have genuine safekeeping banks.
- No extra bank capital would be needed to hold demand deposits. But Capital is needed needed to make loans.
- Banks could offer interest on demand deposits, but only up to one-week T-Bill rate (soon to be market-based). Banks could charge fees for handling deposits if they want. Competition would ensue.
- Banks could not make loans for longer than they secured funds. Duration mismatch and bad loans are what causes runs on banks. I eliminate those risks to demand depositors. Time deposits and bondholders bear all the risks.
- CDs and time deposits are not guaranteed. Phased in. Risks explained.
- Bank creditors, bond investors, and time deposits would be on the hook for bad bank loans, not demand deposit customers.
- End the FDIC as we know it. Demand deposits guaranteed to any amount (because they are parked in T-bills).
- Until it was time to implement market-based rates (steps 3 and 4 are among the prerequisites), I would STFU. Steps 3 and 4 in and of themselves may set rates before the official handoff. I would give no forward guidance nor would my team because nobody knows what any president or country will do or how the market and economy might react to that.
- When asked questions about the economy, I would say “I don’t know, nor does anyone else.” When asked questions about fiscal policy, I would suggest Congress and the President are out of control.
- Within three years, the team would make a determination if we were in a good position to turn interest rate policy over to the market.
- Ultimately, I would fire everyone involved with interest rate policy decisions, then resign.
I am open to timelines and ideas. So consider my plan as a starting point.
My only concern is point number 8. Banks would have to secure duration-matched funds to lend when currently they just borrow money into existence.
I do not know how long a transition to point 8 would take. Depositors would be locked in for the term. A likely consequence would be higher rates for long-term loans. 30-year mortgages might dry up.
Finally, we would likely need some minimal regulatory framework for bank lending and audits, but the bulk of what the Fed does would go away.
Other than point 8, the rest is easy.
Anyone for Mish’s plan?
If so, please notify your representatives. Tell them you support Mish for Fed Chair, not the dueling Kevins.
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Trump is on a very foolish mission to “Pack the Fed”.
Hello Jerome Powell, Is Everything Under Control?
On January 31, 2025, I asked Dear Jerome Powell, Is Everything Under Control?
Gold does not believe the Fed has things under control and neither do I.
I will unpack the Fed by ending it.
I have the Epstein videos. Withdraw from consideration.
You had me at: I Officially Announce my Availability
“As stipulated by the Banking Act of 1935, the Chairman is chosen by the president from among the sitting governors to serve four-year terms with the advice and consent of the Senate.”
Doesnt this mean the next chair has to be from the current board of governors which doesnt include Hasset or Warsh? But Mish’s 15 point plan is sensible and would I think right away start the USAs economic recovery from its ills and start restoring a strong middle class. Thanks for the continuing efforts to inform and enlighten everyone. Someone should send the list to Musk. If he or anyone wants to fix things they could help a lot by tweeting these reforms to millions and supporting and helping implement them.
The board of governors not being private, Trump might exercise he claim of unitary executive power to name anyone.
I would rather have Powell controlling the banking system than Trump and his nightmarish sycophants!
The Banking system we have, allows us, (the U.S. banking system) to control world finances. Sure, the Fed blows bubbles and enables the banks to exert incredible power over world events, but the alternative?
The alternative is to give politicians that power?
There would be myriads of unintended consequences!
This is absolutely the best plan I’ve heard.
Mish,
Awaiting your critique as prospective Fed chair: (-:
Trump’s and Miran’s:claims yesterday re tariffs and inflation:
https://truthsocial.com/@realDonaldTrump/posts/114819184205071380
https://www.cnbc.com/2025/07/08/tariff-prices-trump-miran-meteor.html
July 2025 CEA report:
https://www.whitehouse.gov/wp-content/uploads/2025/03/Imported-Goods-Have-Been-Getting-Cheaper-Relative-to-Domestically-Produced-Goods.pdf
So a Trump appointed advisor says what Trump wants to hear.
It’s bullshit
The FED is run by the bankers it serves. The Lobbyists virtually control the House Committee on Financial Services & the U.S. Senate Committee on Banking, Housing, and Urban Affairs.
These interested parties (including the American Bankers Association) routinely spend more money influencing legislation, than all other industry and labor groupings.
When the banks collapsed they were saved by the Relief Act of 2006. Before 2008
the Fed had only: $895 assets – $857 debt = $40 net.
I like it.
All you have to do is get rid of the ABA. The ABA was responsible for the Deregulation of Reg. Q Ceilings (the ABA controlled the House and Senate banking committtees), so the banksters always knew they could obtain legal reserves after the fact.
Money grew at less than a 2 percent compounded annual rate in the decade ending in 1964. In the nine subsequent years money supply grew at a rate in excess of 6.5 percent…
The banks were ok before Walter Wriston came on the scene.
The process of monetizing time (savings) deposits within the payment’s system began in the early 1960’s with Citicorp’s Walter Wriston inventing the negotiable CD – which drew funds out from all over the world.
Wriston “presided over an encyclopedic range of innovations – among them negotiable CDs, term loans, syndicated loans, floating-rate notes and currency swaps-that ended forever the moribund banking of the 1950s and ushered in our razzle-dazzle age of finance”.
Wriston “masterminded the bank’s explosive change from stagnant deposit-and–loan institutions to a global purveyor of financial resources.” Consequently, banks began to manage their liabilities, and corporations began managing (minimizing) their non-interest-bearing cash balances.
I hope Mish wouldn’t do it.
No plan needed other than getting on your knees to trump.
86/47
In 1907 the Bank of US in the Bronx had a bank run. There was no Fed to save the
banking system. Banks need little assets to lend and to repay loans. Without the 800 pounds Gorilla, without the defensive mechanism of the Fed ==> the financial cancer will spread. Greta Thunberg is more qualify than u.
Sorry, are you saying that the Fed keeps financial cancer at bay?
If so, good God man, the Fed IS the cancer. Or have you not looked at how many Federal Reserve Notes it takes to buy an ounce of gold these days? From $20.67 to over $3300.
Interested in your take on tariffs. Are all of the worries from economists about tariffs – it appears they were universally wrong – inflation is almost non-existent.
Inflation nonexistent – yeah right.
All the economists, including the Fed thought tariffs would hit with a delay.
What is it you fail to understand about tariff front running, discussed here many times?
Finally, Trump might kill this economy so hard, due to demand destruction.
There is a reasonable chance we get stagflation out of this.
https://x.com/zerohedge/status/1936913627069464705
Japan eating massive tariffs?
I seriously don’t get it – seems like food inflation finally stabilized etc.
Occasionally a company will eat part of the tariff, it is not the norm
Flation is always required with Fiat currency. It does not matter the form of flation, it just matters the necessary quantity of flation at a given time.
Banks borrow to lend and borrow to repay. When the O/N market is clogged the banks need the Fed. A Libertarian will tell them: F**k u ! Mish will start a run on the banks
It seems you cannot read or think.
Depositors are 100% protected in my scheme – I have 100% reserves on demand deposits, parked in overnight treasuries
I’m holding out for David Stockman.
I believe his plan would be nearly identical. I would be happy with Stockman.
With current global corporate, governmental, and private debt burdens, with the governmental social contracts medicare, SS, and medicaid (and in other countries) under duress, with the coming progressive replacement of human workers, professionals and non-professionals with robotics, with a crash coming in overvalued equity, commodity, and crypto markets, Modern Monetary Theory and digital money creation, which is operationally already being currently used on a global central bank basis … appears to be the only way forward. Given the parameters, the old monetary system is simply anachronistically unworkable …
Project 2025 calls for the next Fed chair to liquidate non-treasury assets like commercial real estate bonds, junk bonds and other assets that have zero to do with interest rate policy. Real estate overall would become very cheap if the federal government were required to mark all assets to market. The commercial and residential real estate market would crash overnight. If a policy was then put in a place that buyers must occupy the real estate and cannot be an investor, suddenly things would become affordable for small businesses and people looking to occupy real estate.
If buyers had to occupy real estate then renting of any kind would be impossible (other than renting a room to a student type thing). Not only that but pretty much any skyscraper or even mall/strip mall would be impossible to build because you’d never get that many owners ‘up front’ to pony up money to build such a building.
Then imagine trying to start a business. You’d need to not only have enough money to start the business but you’d also need more money to buy a building since you can’t rent space somewhere.
Far from helping the economy it would turn things into a nightmare.
Nice points. Now think of all the ways you can game them.
You are excluded as you are not a Trump sycophant.
I am OK with that as the Chair does not set rates, FOMC does.
“Hello Jerome Powell, Is Everything Under Control?”
We can’t know what is going on in secret, behind closed doors. But we do know there have been 3 back to back debt fueled financial bubbles, each larger than the previous, pushing harder on a string. The talk of a Great Reset isn’t idle chatter, with gold being re-monetized. Something is up, more than simply the commodity price of gold.
In point 7 you would limit interest paid on deposits, “Banks could offer interest on demand deposits, but only up to one-week T-Bill rate (soon to be market-based).” I am curious as to why you advocate this position.
With no fed, how would money supply be control to whatever is the correct amount as gold did before Nixon? Hopefully not vote buying congress.
Interest rates are no longer determined by the free market. The Fed controls the front and and the long duration rates.
https://www.educatedinlaw.org/2017/03/banks-dont-take-deposits-banks-dont-lend-money/
“An early announcement could allow the chair-in-waiting to influence investor expectations about the likely path for rates, like a backseat driver, attempting to steer monetary policy before Powell’s term ends.”
All eyes are on the FED rate. The market sets the odds and the FED effectively follows the market odds. An allegedly decent jobs report and the odds of a cut dropped to precipitously low level at the next meeting. A back seat driver can’t control what the level of inflation will be next May, when they move behind the wheel.
Independent central banks are definitely the worst way to run monetary policy … except for all the other ways that have been tried to run monetary policy.
Admit it – you just want the job for the Fed dining room. Though I know that Berspankme ate with the little people rather than the officer room.
My advice – Be careful what you wish for.
You mean your reign has Fed Chairman would mean no Zero Interest Rate Program and no Quantitative Easing to infinity? Count me in!
Schrodinger the cat was hiding under the bed when JPM plunged. AIG, Fannie and Freddie went bk. In late 2019 the ON market clogged. In Mar 2020 the Fed clicked electronic money to people bank accounts. The Fed has IEEE engineers.
Fed chair position belongs in a landfill.
Intel is laying off. NVDA is hiring. Intel plunged. NVDA is $4T. INTL new CEO and
AMD CEO are fighting a 800 pounds. Know your enemy and know yourself. The
Fed is the largest buyer of US treasuries. Don’t fight the Fed. The Fed is a 800 pounds gorilla. Lip Bu Tan and Lisa Su can tame the Gorilla. Mish can’t.
I read through all of your points. So ending the Fed means there’s no central bank, correct?
So the money supply would be controlled by all the other banks that remain in existence? They would make loans and create new money, correct? Then when the loan is paid off, the money is destroyed.
Also, are you saying the dollar is backed directly by treasuries? Just checking.
I agree. The Fed either has to be eliminated or has to be statutorily required not to buy anything other than something really short duration like T-Bills. They can’t be allowed to buy any other treasuries, MBS, or other assets. And, they’d have a cap placed on their balance sheet. Spit balling $1T sounds about right.
Interest on reserves puts WAY TOO MUCH MONEY going into the pockets of banks. I hope Cruz’s proposal to eliminate this passes.
The money supply would not be controlled by other banks. They would no longer be allowed to ‘create new money from loans’. The money for loans now comes from investors ( #8 ) so in order to make a loan the bank has to have 100% of the money available from investors. This also means money is not destroyed when the loan is paid.
In essence, banks under Mishs plan are just loan facilitators between investors and those seeking loans. All the bank would do is the due diligence to make sure you were credit worthy to get the loan AND line up investors for the duration of the loan and the interest terms. So if you wanted a 15 year 200K loan for a home, the bank needs to find enough investors willing to tie up 200K for 15 years at X rate of interest.
The downside to this as I noted above is the bank itself and the loan officer having nothing skin wise in the game. As an investor you take the risks in tying up the money for that length of time AND hope that the interest rate doesn’t kill you if rates go the other way AND hope the borrower pays it all back / collateral is worth any unpaid balance.
Has there ever been a president with a lesser understanding of basic economics than TACO?
Yes, the President(s) before him….
#3 – With no interest on the reserves the Banks would pull out their money (as you expect). But the most likely thing to happen is all that money that’s currently not circulating would almost certainly get put into speculative assets (stocks, bonds, real estate, gold, crypto) fueling a massive bubble in all those areas since there is a LOT of parked money and a short time to move it (18 months) to earn money to offset inflation.
#5&7 – Why would banks accept such deposits at all? They don’t need the headache since there is no upside for them for holding your money for you. Such accounts would almost certainly have to PAY fees to the bank for safe keeping + electronic banking convenience rather than earn interest. Not sure the public would like this. Instead why not have the Fed provide everyone with such an account for free so instead of dissolving, this would be the Feds new mission, be the Nations electronic savings/checking account for everyone.
Everything else regarding lending would be province of banks. With all the rules you suggested. Then banks along with those who capitalize them via their money for loans would take the risks. Of course people would need to be a LOT more savvy on the banks since the loan manager at the bank has little skin in whom he loans money to so as an ‘investor’ in the bank via your capital you stand to lose a lot if that manager makes a lot of bad loans. Not sure any of your points/plans deals with that issue and yet that’s the heart of what’s going to be needed by people/businesses (loans for houses/businesses etc).
Adding some extra text to fool this into thinking I made some edits so it doesn’t go to spam…
It’s my understanding that the Fed didn’t pay interest on reserves prior to 2008. So like you say, banks will chase risky assets just like they did prior to the S&L failure.
I don’t know that the answer is, but I don’t like these two major issues that seem to be at the root of what appears to be MMT-based manipulations of the economy:
Interest on reserves
An uncapped Fed balance sheet with impunity to buy any asset at any price, just because they’re the “lender of last resort”.
The thing I like about crypto is that it’s not backed by anything (yet), so when if / when it busts, then those speculators are going to lose their shirts, which brings me to my final point.
The problem today is that when things go bust, there aren’t enough investors losing their shirts to ensure there’s respect for the other side a boom.
Banks would accept deposits to get free money. They can (must) park deposits at the Fed. They pay less interest to depositors.
Caitlin Long at Custodia bank operates on this model already.
No interest on reserves is in reference to QE which I would wind down to nothing.
How come no one mentions bringing back Alan Greenspan? If he won’t do it, I would support Mish for the job.
Requiring matching maturities (loans and deposits) wouldn’t end 30 year fixed mortgages, since the vast majority of 30 year fixed mortgages are securitized into MBS’s. It would end portfolio fixed rate mortgages, though, which is probably a good thing. One regulatory issue, though, is that under Dodd Frank, residential mortgages that aren’t fixed for at least the first 5 years are effectively illegal, since they’re stripped of all safe harbor protections. 3/1 ARMS much less one years ARMs are currently non-existent. Allowing bank to make 5/1 or 5/6 ARMS that aren’t matched with 5 year deposits would eliminate most of the interest rate risk while still allowing some portfolio (non-securitized) lending.
The banks weren’t allowed to make real estate loans in the beginning.
Be prepared to be called “low IQ” by Trump.
Ehh… that would make for a pretty stable base, but also probably pop the massive bubble and cause a massive system crash
Point 9 means the ability to park the money one doesn’t need this year into a CD now comes with more risk than now where the CD is insured. This is partly offset by point 5 where regular savings accounts are still insured, but the interest rate is capped very low.
The combination will force people who should not be taking risk into taking that risk or dying by inflation. Wall Street will love it, I’m not sure anyone else will.
Otherwise I don’t see a lot to complain about. Your meeting with Congress will be interesting as you will drop the blame for pretty much everything on their inability to balance a budget.
Thanks for applying, Mish; someone has to step up for these unpopular positions. But you would not get my vote
I think the Fed could change lots of things, and of course, it is not always right or on time with its decisions. But I think most people underestimate how most of us benefit with easy day-to-day transactions and contracts and not the bank panics that were occurring as often and ferociously as they did before 1913.
Personally, I love markets in most cases, but I want some more ‘protection’ for the US citizenry from potential systemic catastrophes like the bank panics/runs before 1913.
And your reservation about point #8 is well understood. Your plan for safe bank-keeping sounds good until it results in enough depositors having to promise to keep money in their accounts for 15-30 years for everyone that wants a house loan.
The U.S. Golden Age in Capitalism worked.
what would you do with building after all that
Competency need not apply.
Point two is interesting – any idea how the number of insiders interested in ending the fed has changed over time? 15 years ago I could see their ranks increasing, but these days it doesn’t seem like the movement has as much traction.
“I do not know how long a transition to point 8 would take. Depositors would be locked in for the term. A likely consequence would be higher rates for long-term loans. 30-year mortgages might dry up.”
A reversion to 15-year mortgages being standard would make housing more affordable and increase the housing churn so the NAR should be fully on board. Imagine Mr. Yun singing your praises on a regular basis!
They didn’t want you in Dallas so I’m not sure you’ll be able to go all the way to the top 😉
“In case you missed it, there is an opening for President of the Dallas Fed.
I sent in my resume with a pledge to fire nearly the entire staff except for those working on plans to end the Fed entirely.”
https://mishtalk.com/economics/powell-renominated-for-fed-chair-but-biden-will-reshape-the-fed-to-his-liking/
Mish, you wouldn’t get the job because you’d refuse to be Trump’s lap dog.
Mish, would you Eliminate the Fed? 🪖☮️✝️
is that not point number 2 ?
Tex 272 would you learn to read the article?
How do bank regs which aim to replace the Fed affect the USD and competition with foreign banks? 5 – 8.