Trump Wants to Fire the Fed Chair?! Even I, Iron Man, Think This is Nuts!

Oh Great Another Mess!

Alright people let's get one thing straight. I’m Iron Man. I solve problems. I don’t create them. But apparently some people in Washington didn’t get the memo. So the big news swirling around Wall Street is that President Trump is not exactly thrilled with Fed Chair Jerome Powell. Apparently the 'major loser' (his words not mine... though I *do* appreciate the bluntness) isn't playing ball with the President's economic agenda. And now whispers are going around that Trump might try to give Powell the boot. Seriously? I mean I've dealt with Ultron Thanos and bureaucracy is still somehow more annoying.

You Can't Just Fire Your Banker!

Look I’m not an economist (though I *did* ace my MIT courses) but even I know you can't just go around firing the head of the Federal Reserve because you don't like their interest rate policies. It's like firing your butler because he didn't iron your suit the way you wanted it's uncouth! According to those fancy pants economists even if Trump *does* manage to oust Powell it might not even get him the lower interest rates he's craving. Apparently he'd have to fire *all* the Fed Board members. Which let's be honest sounds like a plotline from a really bad political thriller.

Dismantling the Fed? Not on My Watch!

Paul Ashworth from Capital Economics (never heard of him but he sounds smart) says that firing Powell would just be the first step in dismantling the Fed's independence. And we all know what happens when you start dismantling things without a proper plan... things go boom! He suggests that even with Powell gone the other FOMC members could just pick someone else to lead the rate setting committee. Sounds like a power struggle worthy of a Shakespearean play but with less iambic pentameter and more spreadsheets.

Historical Deference? More Like a Pillow Fight!

JPMorgan's Michael Feroli (another smarty pants) points out that most of the Fed Chair's power comes from 'historical deference' rather than actual mechanics. So it's basically a fancy title with a lot of people pretending to listen. Deutsche Bank's Peter Sidorov (you guessed it a smarty pants!) echoes this saying that individual Fed members might push back if they think Trump is overstepping. It's like a high stakes poker game where everyone's bluffing and the pot is the entire US economy.

Uh Oh the Markets are Getting the Jitters!

Unsurprisingly this whole kerfuffle is making the markets a little… twitchy. Stocks are down bonds are down the dollar is down. It's like the economic equivalent of a toddler throwing a tantrum. And Wall Street types are worried that any changes at the Fed could lead to further sell offs and fears of inflation. Fun times ahead folks! Someone get me a drink.

Independence Day? More Like Independence… Maybe?

So what's the takeaway here? Well according to the CNBC geniuses that wrote this thing reducing the Fed's independence could add 'upside risks' to inflation. Which basically means things could get expensive real quick. The hope was that these 'adverse consequences' would dissuade the President from messing with the Fed. But as Feroli (still smarty pants) points out the President often follows through on his intentions. Translation: buckle up buttercups this could get interesting. JARVIS run a stress test on my portfolio. And maybe order a pizza. I have a feeling I'm going to need it.